The Tax Man Cometh?

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President Bush wants to keep the Internet (search) a tax-free zone. But there’s a strong push to let the taxman in — and it’s coming from Republicans.

Republican Senators Lamar Alexander and George Voinovich have been log-jamming a Senate bill that would renew a ban on Internet taxation.

At first, Internet taxers charged that state governments were being deprived of local sales tax because too many folks choose Internet shopping over their local mall. The problem with that theory is that state tax collections have been increasing. Last year, state’s increased their tax revenue by 4.5 percent.

Sen. Alexander now contends that providers of Internet services are given a free ride by the tax ban, and that amounts to a kind of government subsidy of the new, high-speed providers of Internet services. He says this potential lost revenue costs just his own state of Tennessee over $361 million.

But those who want to ban Internet taxes, like Sen. George Allen, say that is not only a stretch of logic, but new taxes on a fledgling industry would hold up high-speed access for customers.

The President agrees: "If you want broadband access throughout the society," says President Bush, "Congress must ban taxes on access."

And that’s the Asman Observer.